Correlation Between Prudential California and Nuveen All-american
Can any of the company-specific risk be diversified away by investing in both Prudential California and Nuveen All-american at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Prudential California and Nuveen All-american into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential California Muni and Nuveen All American Municipal, you can compare the effects of market volatilities on Prudential California and Nuveen All-american and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Prudential California with a short position of Nuveen All-american. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Nuveen All-american.
Diversification Opportunities for Prudential California and Nuveen All-american
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Prudential and NUVEEN is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Nuveen All American Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen All American and Prudential California is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Prudential California Muni are associated (or correlated) with Nuveen All-american. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen All American has no effect on the direction of Prudential California i.e., Prudential California and Nuveen All-american go up and down completely randomly.
Pair Corralation between Prudential California and Nuveen All-american
Assuming the 90 days horizon Prudential California is expected to generate 1.38 times less return on investment than Nuveen All-american. But when comparing it to its historical volatility, Prudential California Muni is 1.51 times less risky than Nuveen All-american. It trades about 0.47 of its potential returns per unit of risk. Nuveen All American Municipal is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 958.00 in Nuveen All American Municipal on August 19, 2025 and sell it today you would earn a total of 41.00 from holding Nuveen All American Municipal or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential California Muni vs. Nuveen All American Municipal
Performance |
| Timeline |
| Prudential California |
| Nuveen All American |
Prudential California and Nuveen All-american Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential California and Nuveen All-american
The main advantage of trading using opposite Prudential California and Nuveen All-american positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential California position performs unexpectedly, Nuveen All-american can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nuveen All-american will offset losses from the drop in Nuveen All-american's long position.The idea behind Prudential California Muni and Nuveen All American Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Nuveen All-american vs. Nuveen Small Cap | Nuveen All-american vs. Nuveen Real Estate | Nuveen All-american vs. Nuveen Real Estate | Nuveen All-american vs. Nuveen Preferred Securities |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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